S&P 500 Futures struggle above 3,900 as US Treasury yields stay firm near yearly top

• S&P 500 Futures dwindle after the heaviest jump in three weeks.
• US Treasury yields fail to respect Fed, cheer vaccine news, stimulus hopes.
• Preliminary reading of the US Q4 GDP becomes the key.

S&P 500 Futures trim early Asia gains while revisiting the 3,920 levels during Thursday. In doing so, the risk barometer fails to extend the previous day’s heavy run-up amid hopes of further stimulus.

While the Fed’s sustained support for easy money policies favors the global equity bulls, strong bond coupons continue to flash the reflation risk, which in turn weigh on stocks.

That said, US 10-year Treasury yields stay strong near the February 2020 highs, marked the previous day, rising 2.3 basis points (bps) to 1.413% by press time.

Not only the signals for extended money supply but the recent positive headlines concerning the coronavirus (COVID-19) vaccines also portray the market optimism and propel the Treasury yields. Following AstraZeneca, the Pfizer-BioNTech vaccines also conveyed 94% effectiveness versus the virus following a two-jab process.

Also on the positive side could be US President Joe Biden’s push for microchip buying and hints that China should continue with easy money, shared by the South China Morning Post (SCMP). It’s worth mentioning that Beijing flashed signs of adjusting monetary policy if it manages to stabilized post-pandemic recovery earlier in the week.

Against this backdrop, Asia-Pacific stocks trade mixed whereas commodities fizzle the initial recovery moves.

Moving on, market players should keep their eyes on the stimulus headlines amid chatters of the House voting on Friday. Meanwhile, US Durable Goods Orders for January and Q4 GDP will be the key to watch.

Read: US January Durable Goods and Q4 GDP Preview: Consumers worry but they spend